BASF North American CEO predicts weak global demand for 2013

The CEO said that low US natural gas prices were, on margin, a reason to consider more investment in chemical manufacture. The possibility of exporting lower-cost chemicals to foreign markets was less feasible because there was insufficient infrastructure to transport chemicals for shipping.

Keywords:

By DENNIS K. BERMAN

BASF's North American chief, Dr. Hans Ulrich-Engel, said he
anticipates 2013 will be a weak year for global economic
demand, and that is making it difficult to forecast performance
for the world's largest chemicals company.

"We will have to get used to the fact that volatility is the
new normal," said Dr. Engel in an interview with The Wall
Street Journal. "The best expression is that we are living
in a world of "Vuca:" volatility, uncertainty, complexity, and
ambiguity."

Dr. Engel said that BASF customer behavior has changed in
the years since the 2008 financial crisis. Where the company
once had insight to its order flow on a rolling basis of three
to six months, that is less true today.

"Currently we have good visibility for up to 60 days, max 90
days," he said. "But that's it."

Dr. Engel said that the company is still in its 2013
budgeting process and did not yet have specific guidance for
the year ahead.

He did provide some color about the company's various
divisions, saying that the company was so far making up for
weakness in chemical orders with earnings from agricultural
products and its oil businesses.

"Overall, chemicals activities are weaker overall than they
were last year, but oil and gas and our agriculture solutions
unit are significantly better than last year," he said.

Dr. Engel said that low natural-gas prices in the US were,
on margin, a reason to consider more domestic investment in
chemical manufacture. The possibility of exporting lower-cost
chemicals to foreign markets was less feasible,
largely because of insufficient infrastructure to
transport chemicals for shipping.

Dr. Engel was more optimistic about the prospects for the
euro zone, saying that he expects the currency to survive, even
if some countries left the currency union. Greece, in
particular, was diminishing as a worry.

"What does Greece actually mean for our business? Our
company has $100 billion in sales," he said. "Greece for us is
less than $100 million; it's relatively small."

"Greece leaving the euro zone 12 to 18 months ago would have
caused havoc on the European banking system. Now we are
in a totally different situation. Lots of measures have been
taken to mitigate the effects."

Dow Jones Newswires

Have your say

All comments are subject to editorial review.
All fields are compulsory.